Trade can be made free, but

But a moment’s thought shows the deficiencies of this approach. For a start it would deny market opportunities to countries with low income levels - opportunities that have been crucial to the subsequent growth and high-income levels of countries ranging from Japan to southern Europe. And, as we have seen, trade liberalization has been accompanied by increased, not decreased, employment all round.

Moreover, once embarked upon, this road leads to a reversal of the trade liberalization that has served us so well. Thus it might be said that Australian farmers with our vast agricultural land resources have unfair advantages over European farmers in broad-area crops like wheat. Similarly, Australia, with its abundance of easily won mineral wealth, is not on a level playing field with mining operations in other countries. In both cases, many in importing countries would seek to equalize the competition by placing a penalty on Australian exports.

More recently, some have sought to use environmental or worker safety standards as conditions for permitting other countries to export to us. Although many championing such causes do so out of strong convictions, it means paternalistically imposing our own standards on other countries. And often supporting measures to restrict trade on safety or environmental grounds are those with a vested interest in maintaining a cushion against more competitive suppliers. But the protected suppliers’ gain is the consumer’s loss.

Even seeking to use the fair trade weapon as a pressure on manufacturers to lift employment conditions in poor countries where they operate is likely to backfire on the workers in those countries. Forcing higher wages is likely to mean industries migrate to other countries which are less susceptible to such pressures. The outcome is lost jobs in the targeted country, with the displaced workers having to accept far inferior conditions than those they previously experienced.

Concluding Comments

There is in fact no yardstick by which one country can be judged to be playing fair in its trade relations with others.

Setting a criterion of "fairness" means the trade has to be managed. Some bureaucracy would need to sift through literally thousands of trade items across 200 countries to give each product the elephant stamp of approval. This would grind commerce down and with it living standards would fall in affluent and poor countries alike.

This bureaucratic intervention, the openings "fair" trade intervention offers vested interests to protect themselves, and the denial of opportunities for poor countries to lift their living standards all testify against employing the notion of "fair" competition in trade relations.